Lending Club and the Peer-to-Peer Lending Market in 2016

Published 28 Nov 2016
Reference 6255
Topic Strategy
Region North America
Summary

The LendingClub case narrates the development of the leading marketplace lending organization in the USA from its founding in 2006 by Renaud Laplanche to the crisis of 2016. It provides information on the original business model targeting the personal loan market, as well as the expansion into small business loans, loans to parents to get their children through private school, medical procedures, partnerships with banks and institutional investors, etc. The case describes the events leading up to Laplanche's departure in May 2016.

Teaching objectives

Like other industries, banking is facing threats from substitute service providers, collectively referred to as FinTech firms. The Lending Club case examines the threat of disruption from the point of view of incumbent banks as well as the opportunity for disruption from the point of view of the new entrants. The difficulties it faced enable discussion of whether the business decisions of LendingClub were the main reason for its troubles, or whether the business model itself is viable, i.e. how sustainable were the advantages that LendingClub built up in its first decade of existence?

Keywords
  • competitive strategy in banking
  • banking business models
  • Peer-to-Peer Lending
  • P2P lending
  • banking profit analysis
  • banking regulation
  • FinTech
  • banking disruption
  • Q11617